Statements of Intent or Purpose in Your Oklahoma Estate Plan
The reasons you create a trust are certainly special and important to you, but your intent or purpose for creating a trust can also have significant legal ramifications. For this reason, it is often critical that an Oklahoma trustmaker express in writing their purpose for creating the trust. There are essentially two different ways of documenting a trustmaker’s intent—each have slightly different purposes, and sometimes both are generally called a “statement of intent.” Let us examine each of them.
Statement of Intent or Purpose within the Trust Document
Most trust documents are strangely silent when it comes to expressing the trustmaker’s purpose for establishing the trust. As a result, many trustees may not understand the trustmaker’s purpose for creating the trust they are now tasked with administering. A solution to this dilemma is to include a statement of intent or purpose as a separate provision in the trust document.
Some possible examples of a trust’s purposes are:
- To eliminate or reduce estate taxes
- To protect the trust’s accounts and property from beneficiaries’ creditors or divorcing spouses
- To educate trust beneficiaries in financial management
- To provide for a disabled beneficiary
- To preserve the family home so that your family can enjoy it for many generations to come.
Language of intent or purpose in a trust document can also help beneficiaries understand the trustmaker’s reasons and potentially ease any hard feelings among beneficiaries, particularly if money and property are to be divided unequally or one beneficiary is to receive a unique piece of property or beloved family heirloom.
Letters of Intent Apart from the Trust Document
While you may know in great detail how you want your estate planning wishes to be carried out, it is not always wise to include every detail in the trust document. It is often necessary to leave some discretion in the hands of the trustee to provide some flexibility in administering a trust that may last for many generations. For example, the question “What is necessary for one’s health, education, maintenance, or support?” would most likely result in very different answers from members of the two generations. We often expect trustees to answer such questions with no guidance or direction about what the trustmaker meant. This situation is where a letter of intent can be essential.
In general, a letter of intent is a nonbinding letter from the trustmaker to the trustee that guides them in exercising their discretionary powers. A letter of intent should not be a law firm’s form letter that simply repeats time-worn legal phrases used in trust documents. A well-drafted letter of intent will express in plain English the trustmaker’s goals or purposes that might be imprudent or puzzling if they were included in the trust document itself.
Letters of intent can also guide a trustee when a trustmaker might have concerns about a particular beneficiary but does not want to detail such concerns in the trust document where they might prove embarrassing for the beneficiary and anyone else who reads the trust.
